MNC Skyvision raises $220 million from Indonesia IPO

MNC Skyvision, an Indonesian pay-TV operator owned by media group Global Mediacom, has raised Rp2.15 trillion ($220 million) after pricing its initial public offering above the bottom end of the indicative range.

Reflecting strong investor interest, the base deal was fully covered on the first day of bookbuilding, which started on June 18, and the company ended up exercising the upsize option in full, increasing the deal by about 28%.

The IPO attracted about 75 institutional accounts and around 70% of the demand came from long-only investors, a source said yesterday. The final allocation is going to investors from Asia, including Indonesia, Europe and the US, the person said.

The early demand included four anchor investors, although there was no information of how much they ended up buying. Two of the anchors are media specialists — one based in the US and the other in Malaysia — while the other two are capital markets investors, a source said last week.

As in other Indonesian IPOs, the retail tranche is expected to be small, accounting for about 1% of the deal, the source said. The retail offering period will run from June 29 to July 3. The listing on the Indonesia Stock Exchange is scheduled for July 9.

MNC Skyvision sold a total of 1.4 billion shares, with the base deal accounting for 1.1 billion shares and the upsize option for the remaining 312 million shares. The price was fixed at Rp1,520 per share, versus a marketing range between Rp1,460 and Rp1,750. Based on the price range, the company could raise $170 million to $200 million through the base deal, or up to $260 million including the upsize option.

The base deal represented about 16% of the enlarged share capital, and was made up of 77% primary shares and 23% secondary shares. The upsize option was all secondary shares. Bhakti Investama, which owned 20% of the company prior to the transaction, was the selling shareholder.

At $220 million, the deal is the biggest IPO in Indonesia this year. So far, five companies have raised a combined $125 million and the largest offering amounted to only $46 million, according to Bloomberg data. MNC Skyvision’s greater size may have helped attract international investors who are looking for exposure to Indonesia.

The deal is also a play on Indonesia’s consumer demand story, which is backed by robust economic growth. The country’s GDP grew by 6.5% in 2011, supported by strong private consumption, and is expected to grow by a similar amount this year.

The IPO price values MNC Skyvision at a 2013 enterprise value-to-Ebitda multiple of 8.3 times, according to the syndicate average. The company does not have any close comparables as it will be the only listed pay-TV operator in Indonesia. But as a reference, other Asia-Pacific pay-TV operators trade at an average 2013 EV/Ebitda multiple of around 8.6x.

MNC Skyvision is the dominant pay-TV operator in Indonesia, which is one of the most underpenetrated markets in the world for pay-TV. This suggests that the company will continue to grow at a rapid pace, which should be attractive to investors, sources have said.

Its main business is subscriber-based media services. It had 1.16 million subscribers as of December 31, 2011, which represents a market share of 69.6% based on data by Media Partners Asia, MNC Skyvision said on its website.

The company said it will use about 70% of the IPO funds to buy broadcasting equipment. It will use the remaining amount to fully settle loans to Global Mediacom and Bank BRI, and as working capital.

Before the transaction, Global Mediacom, which is the biggest and only integrated media group in Indonesia, owned 75.5% of MNC Skyvision, while Bhakti Investama had a 20% stake and other minority and individual shareholders owned 4.5%.

J.P. Morgan and Morgan Stanley are joint global coordinators, while Danareksa Sekuritas and MNC Securities are handling the domestic portion of the deal.

As stocks in Asia fell broadly ahead of a European summit later this week, Jakarta’s benchmark share index ended yesterday’s trading down 0.8%, at a level almost unchanged from where it started the year.